Is this the end of the market euphoria? What will the week bring?
Just days after threatening to impose further 100% tariffs on Chinese goods, Donald Trump backtracked, expressing his willingness to meet with Xi Jinping at the APEC summit in South Korea. The declines in major stock indices were halted.
Is this the end of the market euphoria?
The announcement of new tariffs on China led to a rapid sell-off on Wall Street, pushing major US stock indices from historic highs. While Donald Trump quickly began to backtrack on his words, the seeds of uncertainty were sown among market participants. Although indices remain near record highs, volatility remains low, and the government shutdown in the United States is already among the longest in history. Not only is the shutdown costing the US economy approximately $15 billion per day, but the suspension of key macroeconomic data releases significantly complicates the assessment of further action. FedAs a result, the market becomes more susceptible to surprises, which increases short-term volatility.
It's no surprise, then, that many market participants are seeking a "safe haven" in other asset classes. Gold – which has gained around 60% since the beginning of the year alone – is experiencing one of its strongest periods on record. The rally was fueled by central bank purchases, but Goldman Sachs forecasts indicate that this demand will decline to around 870 tonnes next year. However, the bull market may continue thanks to ETFs, which continue to buy the metal. The situation is also fueled by the fact that the COMEX has increased the margins needed to maintain open gold positions. In the past, if the number of speculative or net long positions was extremely high and margins increased, this led to at least a short-term correction. Will this be the case again this time?
- Can anything stop gold from rising?
- Will inflation surprise again?
- Will the government shutdown close markets?
About the host
Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.
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